Port Talbot Arc Furnace to receive £500m boost, with 2,500 jobs still on the way – News

THE UK GOVERNMENT has agreed to give Tata Steel a £500m ($651m) grant to build an electric arc furnace at Port Talbot, but the company will still lose 2,500 jobs as it plans to close its only operational blast furnace.

Tata Steel is to invest £750m in an electric arc furnace that can produce greener steel by using electricity from renewable sources to recycle steel scrap.

In January, the company announced plans to close both blast furnaces at the site. They burn coke to make steel, emitting huge amounts of emissions in the process, making Port Talbot the UK’s biggest source of CO2. One blast furnace has already closed and the other is due to close by the end of September.

Decarbonization and deindustrialization

There are growing concerns that British Steel will soon follow suit by closing its Scunthorpe blast furnace, which would mean the end of steel production from iron ore in the UK. Officials have warned that if the operations are not protected, it would put national security and the ability to build major national infrastructure at risk.

Alasdair McDiarmid, deputy general secretary of the Community Workers union, said: “Decarbonisation should never mean deindustrialisation. We will need our steel industry to flourish if we are to create a greener, fairer economy.”

The steel industry has warned the government it must do more to level the playing field with overseas steelmakers, noting that British producers pay up to 50% more for electricity than rivals in France and Germany.

Gareth Stace, chief executive of trade group UK Steel, said: “Steel businesses need competitive electricity prices, access to good quality steel scrap and fair competition from international trade.”

Port Talbot Investment Plans

Tata Steel said basic engineering work on its £1.25bn Port Talbot arc furnace project has been completed. The company expects to submit a planning application by November, with large-scale work starting in July 2025.

Orders will soon be placed for an electric arc furnace and ladle metallurgy furnaces, a new coil box and hot strip shears, a crane package, as well as construction management and civil engineering.

TV Narendran, CEO of Tata Steel, said he looked forward to the rapid implementation of the project and that “the complex and ambitious transformation of Port Talbot has the potential to make the plant one of Europe’s leading centres for green steel production”.

Redundancy packages

The arc furnace is expected to be operational within three years, but will create far fewer jobs – just 500 during construction compared with the thousands that will be lost when both blast furnaces at the plant close.

Under the terms of the government grant, Tata Steel will have to keep 5,000 staff at its UK operations. It currently employs about 8,000, half of them at Port Talbot.

The government says salaried workers who take voluntary retirement will receive at least £15,000, a £5,000 “maintenance payment” and an offer of paid training to gain new skills. Meanwhile, up to 400 workers who faced compulsory redundancy will receive training, a month’s full pay, and then £27,000 in salary over the next 11 months.

Business Secretary Jonathan Reynolds said that while the terms were better than those negotiated by the previous government, he admitted the deal “falls short of what I expected”.

Paul Morozzo, senior campaigner at Greenpeace UK, said more needed to be done to support cleaner industries. “We are calling on the government to heed the warnings of the past and fully invest in the industries of the future. Proper investment in green steel production in the UK would help our renewable energy supply chain, while supporting workers and communities in places like Port Talbot and Scunthorpe, rather than relying on polluting imported steel to build wind turbines.”

The Government has pledged to invest a further £2.5bn to rebuild and decarbonise the steel industry and will publish a steel strategy early next year.